June 12, 2019 / 12:53 PM / 15 days ago

Hungary PM Orban's ally to co-build Chinese railway for $2.1 billion

BUDAPEST (Reuters) - A Hungarian-Chinese group including a unit of holding company Opus Global, controlled by Lorinc Meszaros, an associate of Prime Minister Viktor Orban, has won a $2.1 billion contract to build part of a high-speed Chinese rail project.

The project is part of Beijing’s One Belt, One Road initiative intended to open new foreign trade links for Chinese firms. The line will carry Chinese goods that arrive by sea at the Greek port of Piraeus to other parts of Europe.

The tender to build the 150-kilometer (93-mile) Hungarian stretch of a rail link between Budapest and Belgrade was awarded to CRE Consortium, half of which is owned by Opus unit RM International Zrt., Opus said in a statement on Wednesday.

That means the Opus unit could earn revenues worth about 295 billion forints ($1 billion) from the project over the planned five-year construction period, it said.

At 0940 GMT, Opus shares traded 1.25 percent higher at 405 forints in Budapest, outperforming the wider market, which fell 1.6 percent. Meszaros owns a 36.8-percent stake in Opus, making him the largest single shareholder in the company.

The other half of the winning consortium is owned by China Tiejiuju Engineering & Construction Kft. and China Railway Electrification Engineering Group Kft., representing the Chinese state railways company, Opus said.

The contract to build the rail link, which includes an unspecified amount of financing provided by Chinese Eximbank, will come into effect in the third quarter of 2019, Opus said.

The contract is conditional on Chinese Eximbank providing the required financing. The Hungarian Finance Ministry has already submitted a loan application for the project.

The project, which includes an upgrade of an existing rail line and construction of a new one, could cut turnaround between Budapest and Belgrade to less than half the current eight hours, accelerating the flow of goods to and from the Balkans.

Reporting by Gergely Szakacs

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